Right.... 70 out of more than 7,500 banks doing business in the US.... less than 1 percent. Plus, many of the banks on the list were forced (intimidated) into taking TARP money so nobody would know for sure which banks really were insolvent. (Govt conspiracy to fool the people, right?)

Selling sauce under more than one label is hardly unusual.... how about Chevy engines and transmissions in a Cadillac? Most of the generic products are the same ones sold under labels, but are cheaper because they don't bear the marketing costs. I buy a lot of generics.

I thought we agreed weeks ago that free markets, pure competition and such are useful "ideas" to strive for, not that they really exist or ever have.

Please, it's well documented that this is a huge problem. Those are not just 70 banks, they're 70 of the largest banks, and the rest of the 7500 combined very likely don't do as much business.
I never said it wasn't a wide spread problem. I was trying to say that it is a widespread problem.
Strive for, certainly. Claim that it exists? No. That would eliminate any reason to strive for it.

Agreed, it is a huge problem. It is not, however, a huge conspiracy of an entire sector of the economy to create a crisis that benefits themselves.


We agree, but again I wouldn't call it a conspiracy. Just marketing ploys to sting the unknowledgeable public.

Then we do agree. They are useful economic concepts, but they are not part of the real world where perfection rarely exists.

CWT, kindly set a different tone, or quit the discussion. I won’t have it.

No one said they conspired to create a crisis. They conspired to make money the easy way (by pushing bad loans on an unsuspecting public) and that worked for a time, but being professionals, they should have known there would be blow back. Being in positions where they don't have to compete, they aren't paying the price for being unprofessional, the rest of us are instead.

I haven't reviewed all the postings here, but these are relevant to this discussion:

The Madoff Economy (New York Times, Paul Krugman)

Hope Amid the Gloom (NYT, Bob Herbert)

Liked this quote:

The Madoff is the worst kind of criminal because he has position, responsibility and authority and abused it to make himself greedy rich.

I am sick of hearing how Congress is working overtime, they are having extra sessions, they will not adjourn until they reach a final agreement on some corporate bailout for these wealthy corporate pirates! Why, they act as if they have to pay some kind of random to these pirates who are hijacking our society. There is no such filibuster about bailing out people who are actually in trouble and have been losing their homes for the last couple of years. These people need their Congress to aggressively represent THEM, not corporations, now more than ever! I personally felt that companies who accepted the bailout money should have been forced to re-negotiate loans at a lower interest rate to keep people in their homes and help stop the bleeding. Instead, these corporations have just took the loan and is hoarding it for something worst to come.

It's easy to see why people are losing their faith in our system of capitalism, free markets and democracy. This crisis has managed to strain the very core vales of our national, political, and economic beliefs as a people. I sure hope we prevail.

Madoff’s Ponzi Scheme -- perhaps really not the excepttion
 

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Nobel Prize-winning economist Paul Krugman has a very interesting take on the Madoff Scheme:

That is a darned good question!

Same link as my first in post 49, ArcticStones.

Well, let's see if Mr. Madoff gets bailed out. I don't think Congress will do marathon sessions concerning Mr. Madoff. Is Mr. Madoff too big to fail? Mr. Madoff was very exclusive about participation while the other investors were very liberal. Mr. Madoff isn't holding the government hostage. Although the victims are screwed, I don't see the victims pumping in money just to keep the ponzi scheme going or the federal government for that matter. These are some of the differences but I'm sure there are others.

I think the nature of crime is different but the same forces of greed, corruption or lack of oversight, and excess drives both the investment industry and the Ponzi scheme.

Has anyone found out where all the $$$ went?

The $$$ went from new investors to the earlier investors to maintain the illusion of "earnings". Undoubtedly there were some earnings, but certainly not up in the 10% range paid out (5% or 6% being more realistic), so the cash flow was from new to old investors with Madoff skimming a very small percentage of a very large cash flow. Since such schemes require near exponential growth, Madoff must have hoped that he would be looking into a booming market for the rest of his life. The crash, of course, brought the scheme to a grinding halt -- his investors needed cash as their other investments tanked, and Madoff couldn't supply it.

Thanks for sharing this. If this crook took the normal 3% financial service fee, he would have pocketed at least 150 Millions dollars.

The scheme depended on two things: 1) That market would steadily inflate at something like 3% and 2) that he could grow his subscribers at something like 3% per year. Invested well, the money would bring in 6%. Inflate that by 4% more derived from new investments to publish an earnings figure of 10% or so and keep 2% or something like that for your company and yourself. Both postulates failed of course -- the market crashed, and his investors wanted to cash out. Doom.

Oh! My apologies. That’s a tad bit embarrassing. :o

Well, at least this is just a regular old ponzi scheme. Nothing fancy or unique. Just write out of of ponzi scheme 101.